Project Summary: Two major hurdles must be overcome to cure type 1 diabetes (T1D): (i) the autoimmune response and (ii) destruction of insulin-secreting islets/? cells. Immunotherapies, including improved immune regulation using ex vivo expanded regulatory T-cell (Tregs) or low-dose interleukin-2 (IL-2), may be able to suppress autoimmunity. However, immunomodulation is not expected to directly stimulate regeneration of ? cells. On the other hand, mesenchymal stromal/stem cells (MSCs) possess both immunomodulatory and regenerative properties; thus, MSCs represent a promising new intervention with increasing evidence that MSC therapy can effectively target several injury pathways in a variety of inflammatory and autoimmune diseases. MSCs are an accepted therapeutic for wound healing in plastic surgery applications and are being tested in clinical trials for the treatment of autoimmune and inflammatory diseases, ischemia reperfusion injuries, diabetes and other diseases. Others and we found that after infusion into spontaneous non-obese diabetic (NOD) mice, MSCs migrated into injured pancreas, reduced hyperglycemia and attenuated Th1 immune responses concomitant with the expansion/proliferation of Tregs. Most importantly, MSC infusion led to increased mRNA expression of IL-2 and TGF-? receptors in pancreatic Treg cells in NOD mice. A pilot clinical trial in Sweden showed that a single infusion of autologous bone marrow derived MSCs preserved insulin secretion in adult patients with new onset T1D. This study has yet to be tested in younger patients and no mechanistic studies have been reported that explain the benefit observed. MSCs derived from umbilical cord (UC-MSCs) show greater cell yield, a less invasive harvesting procedure with associated reduced morbidity, and stronger immunosuppressive and regenerative potential and are a popular source for cell therapy. Based on the above principles, we propose a randomized, double blind, placebo controlled single center clinical trial to determine the efficacy of UC-MSC therapy in patients with new onset T1D. Our working hypothesis is that systemic administration of MSCs freshly expanded ex vivo reduces progression of diabetes and preserves insulin secretion through restoring normal function of the immune system and preservation/improvement of pancreatic ? cells in patients with T1D. We will test this hypothesis by the following aims: (i). Determine the safety and efficacy of MSC therapy in patients with new onset T1D when added to standard-of-care, and (ii) Define the mechanisms of protection and elucidate biomarker(s) of efficacy of MSC therapy in T1D patients. The safety of MSC therapy is well documented from multiple trials in various diseases. MSCs may constitute an important therapeutic advancement for T1D. !